USA WOGA Liquids Review (NGL’s)Gregg Dighero, Director, NGL Marketing

Encana Services Company Ltd.Denver| January 31| 2017

NGLs, LPGs and Purity Products

NGLs seem to exist in the twilight zone between crude, the basis of all petroleum products, and natural gas. NGLs are neither here nor there. They possess, to differing extents, characteristics of both oil and gas and have values and market drivers both similar to and distinctly separate from oil and gas.

Source: RBN Energy

What are NGL’s

NGL Products and Physical Properties

Product Structure Abbreviation BTU/gallonVapor

Pressure @ 100 degrees

Ethane C2 66,340 800

Propane C3 91,563 188.62

Iso Butane IC4 99,630 72.644

Normal Butane

NC4 103,740 51.567

Natural Gasoline

C5+ ~110,000 15.567-20.474

Hydrocarbon Uses / NGL Sources

84%

16%Source: EIA 2018 Forecast

NGL Barrel

Product

Ethane (C2)

Propane (C3)

Butanes (IC4 & NC4)

Pentanes (C5+)

Demand Type

Petrochemicals

Heating, Power Generation & Agriculture

Refineries

Exports

Supply Demand

Natural Gas Liquid Uses

Source: Encana, EIA

Propane Autogas

Mt. Belvieu NGL Values

Janu

ary-10

April-1

0

July-

10

Octobe

r-10

Janu

ary-11

April-1

1

July-

11

Octobe

r-11

Janu

ary-12

April-1

2

July-

12

Octobe

r-12

Janu

ary-13

April-1

3

July-

13

Octobe

r-13

Janu

ary-14

April-1

4

July-

14

Octobe

r-14

Janu

ary-15

April-1

5

July-

15

Octobe

r-15

Janu

ary-16

April-1

6

July-

16

Octobe

r-16

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

NYMEX Crude NYMEX Natural Gas Ethane Propane Iso ButaneNormal Butane Natural Gasoline

Mt.

Bel

vieu

Pro

dcut

s $/

MM

Btu

$/B

AR

REL

NYM

EX C

RU

DE

U.S. Natural Gas Liquids

7

Production Forecast

Source: EIA

Natural Gas LiquidsMajor NGL Pipelines

8

Mont Belvieu

Conway

Sarnia

Marcellus

WesternCanada

Hobbs

South LA

SkellyMedford

Midwest

Primary Hub

Secondary Hub

Flow Direction

Bakken

West Rockies

Existing Pipeline

East Rockies

Source: Encana, EV Maps

Enterprise MAPL

EnterpriseATEX

ONEOKSterling

DCP Sand Hills

Enterprise Eagle Ford

EnterpriseTEPPCO

Enbridge Southern LightsEnbridge Alliance

Kinder Morgan Cochin

ONEOKBakkenLateral

Enterprise Dixie

SunocoMariner West

Enterprise Front Range

ONEOKOverland En

terp

rise

MAP

L

SunocoMariner East

Y-Grade

Demethanized Mix

Raw Make

NGL Fractionation Process

Source: Encana, Genscape

10%2%

14%

1%

14%

48%

2%

8%

Mont Belvieu

Conway

Sarnia

U.S.CanadaShare of Total Capacity

%

NGL Infrastructure OverviewFractionation Capacity by Region

Edmonton

NGL Storage

Source: Encana, Genscape*Estimate based on company reports and assuming 1 barrel of ethane yields 100 lbs. ethylene, and includes announced plants that may not necessarily come online.

2%

7%

76%U.S.Canada

5%

Total potential North American ethylene cracking capacity is about 117 billion pounds per year (equivalent to approximately 2,300* Mbbls/d of ethane)

Ethylene Cracking CapacityBy Region

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Gas Oil

Naphtha

Butane

Propane

Ethane

Low natural gas prices make ethane more competitive in the feedslate compared to its other oil based competitors.

Percent

USA Natural Gas Liquids Low Cost Ethane Preferred by Steam Crackers

Source: Jacobs

Petrochemical ProductsThings we use everyday……..

Petrochemical ProductsThings we use everyday……..

EthaneC2H6

EthyleneC2H4

Polyethylene(C2H4)n

PropaneC3H8

PropyleneC3H6

Polypropylene(C3H6)n

PropaneC3H8

PropyleneC3H6

BenzeneC6H6+ Cumene

C6H6.C3H7

PropaneC3H8

PropyleneC3H6

BenzeneC6H6

+ CumeneC6H6.C3H7

PhenolC6H5OH

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020 20250.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

2,000.0

Plant Condensate(Natural Gasoline)

LPG(Propane & Butane)

Ethane

U.S. Natural Gas Liquids

16

NGL Exports

Global markets will be instrumental in balancing NGL supplies

MMbbls/d

Source: EIA

+400%

U.S. Natural Gas Liquids17

Mont Belvieu

Source: Encana Fundamentals

East Coast

West Coast

LPG Import and Export Terminals

ExportImportIdle

• The U.S. has become a net exporter of LPGs (propane and butanes) over the past several years

• Export capacity is expected to grow significantly over the next several years to serve European and Latin America.

• The Panama Canal expansion now allows shorter access of LPG cargoes to make their way to Asia

LPG Export Facilities & Expansions

Company Status OnlineDate

Capacity (Mbbls/d)

Gulf CoastEnterprise Existing Online 140

Targa Existing Online 40

Enterprise (Ph. 2) Existing Online 115

Targa (Ph. 1) Existing Online 60

Targa (Ph. 2) Expected Online 60

Enterprise (Ph. 3) Expected Online 50

SXL Mariner South Expected Online 200

Occidental Unlikely Online 150

Targa (Ph. 3) Unlikely Online 80

Enterprise (Ph. 4) Expected Online 206

Phillips 66 Freeport Expected Online 145

Moss Lake Unlikely 2018 150

East CoastMarcus Hook Existing Online 17

Mariner East I Expected Online 65

Mariner East II Expected 2H2017 200

Total Existing/Expected: 1,168

Source: EIA

USA Natural Gas Liquids Propane Exports

QUESTIONS?